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Jan 29, 2013 - Who is Going to Turn Your Business' Lights On in 2016, Hartford .... an important economic question that emerges from these trends is how a ...

Connecticut’s Changing Demographics Crisis or Opportunity? CT Council for Philanthropy January 29, 2013

Orlando Rodriguez, M.A. Connecticut Voices for Children ctvoices.org

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¨ An

Opportunity? ¨ A Retiring Workforce and Fewer Workers

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One-in-Five by Twenty-Five: In 2025, 20% of CT Residents Will Be 65+ “… even if you had enough people with the ‘ready for prime time’ skills lined up at the door, there simply aren’t enough people to take the place of the huge generation that is departing.” Who is Going to Turn Your Business’ Lights On in 2016, Hartford Business Journal, December 31, 2012

From 2010 to 2025, the state’s senior population (age 65 and over) will increase by 276,289 from 506,559 to 782,848. Simultaneously, the state’s working age population (age 20-64) is projected to decline by 11,284 - from 2,151,762 to 2,140,478.

Sources: Census 2010 QT-P1; Connecticut State Data Center at the University of Connecticut Libraries Map and Geographic Information Center - MAGIC. (2012). 2015-2025 Population Projections for Connecticut at State, County, Regional Planning Organization, and Town levels - November 1, 2012 edition. Retrieved from http://ctsdc.uconn.edu/ projections.html.

Where Have All The Children Gone? K-12 Enrollment in Decline • 85% (143 of 169) of towns had a decline in K-12 enrollment between 2006-07 and 2010-11 • 4% statewide decline in enrollment (grades 1-12) from 523,064, in 2004-05, to 501,325, in 2010-11

Change in K-12 Enrollment: 2006-07 to 2010-11 (based on town of residence)

Where Will Future Workers Come From? Mostly Urban Areas From 2010 to 2025, the population age 0-19 is expected to decline by 92,911 (-10%, 915,766 to 822,855) – Census 2010; Connecticut State Data Center at the University of Connecticut Libraries Map and Geographic Information Center - MAGIC. (2012). 2015-2025 Population Projections for Connecticut at State, County, Regional Planning Organization, and Town levels - November 1, 2012 edition. Retrieved from http:// ctsdc.uconn.edu/projections.html.

Sources: Census 2010; Connecticut State Data Center at the University of Connecticut Libraries Map and Geographic Information Center - MAGIC. (2012). 2015-2025 Population Projections for Connecticut at State, County, Regional Planning Organization, and Town levels - November 1, 2012 edition. Retrieved from http://ctsdc.uconn.edu/projections.html.

Sources: Census 2010 SF1 P12; Connecticut State Data Center at the University of Connecticut Libraries Map and Geographic Information Center - MAGIC. (2012). 2015-2025 Population Projections for Connecticut at State, County, Regional Planning Organization, and Town levels - November 1, 2012 edition. Retrieved from http://ctsdc.uconn.edu/ projections.html.

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Old vs. Young? Shifting Social Spending in Connecticut “… an important economic question that emerges from these trends is how a proportionately smaller working-age population can provide the continuing productive capacity to support a proportionately larger population of retirees.” Population Aging and State Pensions in New England, New England Public Policy Center, June 2010

“Appropriated “spending in…healthcare for current and former state employees [Connecticut], as well as debt service and retirement contributions – has grown nearly 40 percent, from 16 to 22.4 cents of each dollar of General Fund spending, but spending on ‘Education’ has dropped more than 20 percent, from 29.2 to 23.1 cents on the dollar.” Shifting Priorities: Trends in State Appropriations, 1992-2012, Connecticut Voices for Children, October 2012

Population Growth in CT: In-Migration of Minorities • Fertility is below replacement level (2.1) • Population growth only because of net in-migration of minority populations (Hispanics and Asians) • Non-Hispanic white population experiencing negative population growth (more deaths than births) since 2004

Income is Lower (and the Poverty Rate Higher) Among Hispanics & Blacks Median Family Income for Racial/Ethnic Groups $22,113: the poverty threshold in 2010 for a married-couple family with two children under age 18.

Racial Segregation in CT: Where You Live Matters In 2010, Racially Concentrated Areas of Poverty Accounted for: • 8% of statewide population • 10% of all children • 30% of Hispanics • 29% of Hispanic children • 25% of non-Hispanic Blacks • 26% of non-Hispanic Black children

The New Workforce: Fewer Workers and a Greater Share of Minorities “… demographic trends show the incoming pool of talent to replace retiring workers are younger, less educated, lower income, minority and special populations that our older, higher educated, mostly white management teams aren’t accustomed to connecting with or passing intelligence to.” Who is Going to Turn Your Business’ Lights On in 2016, Hartford Business Journal, December 31, 2012

Declining Income for Working-Age Population An Opportunity for Improvement The National Center for Higher Education Management Systems reported that per capita income will decline by $1,056 (in 2000 dollars) in Connecticut between 2000 and 2020. This is the 6th highest decline nationwide. As America Becomes More Diverse: The Impact of State Higher Education Inequality, NCHEMS, November 2005

“It is estimated that by 2020 there will be a 4 percent decline in real personal income due to changing ethnic composition and skill levels.” Connecticut 2020: Fiscal Implications of Economic and Demographic Change, CT Economic Resource Center, 2008

High Unemployment: Urban Towns Hardest Hit “…Connecticut hasn’t created any jobs at all, in net, over the last 20 years. In two recessions alone, we lost 280,000 jobs, or about 17 percent of all jobs in the state. – Dan Haar, A New Look At CT Poverty, With Some Surprises, The Hartford Courant, 25jan2013

Source: The State of Working Connecticut 2012: Employment, Jobs and Wages in the Wake of the Great Recession, CT Voices for Children, Aug. 2012

2011

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The Long-Term Unemployed & the Less Educated “One out of every four businesses surveyed expects at least 10% of their workforce to retire in the next five years; half of those anticipate losing over 20% of their workforce to retirement in that period [five years].” 2012 Survey of Connecticut Businesses, BlumShapiro, September 2012 Statewide Labor Force Unemployment

Statewide Labor Force Long-Term Unemployment

by Education

by Age 70%

25% 22.1%

61.8%

Unemployed Who are Unemployed More than 26 Weeks

60%

55 yrs and older 25-54 yrs 16-24 yrs

20%

Less than high school High school Some college Bachelor's or higher

50% 48.7%

15.2% 15% 12.0%

40% 10% 30%

32.7%

9.3%

6.8% 5%

5.6%

20%

4.2% 2.9%

10% 2006

2007

2008

2009

2010

2011

0% 2006

2007

2008

2009

2010

Source: The State of Working Connecticut 2012: Employment, Jobs and Wages in the Wake of the Great Recession, CT Voices for Children, Aug. 2012

2011

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Where Are The Jobs? “Middle-Skills” “Middle-skill jobs generally require more than a high school diploma, but less than a four-year college degree.” Connecticut’s Middle-Skill Jobs, Connecticut Dept. of Labor, Nov. 2009 2,006

Where Should We Focus? The “Top 5” “The fundamental and enduring solution to reverse the coming decline in workforce income is to raise the income levels of the state’s lowest paid workforce through education (and training) targeted at the skills and knowledge needed by employers in the state.” Orlando Rodriguez, Who is Going to Turn Your Business’ Lights On in 2016, Hartford Business Journal, December 31, 2012

Close corporate tax loopholes by requiring combined reporting Broaden the sales tax base to include more services, as well as reducing tax exemptions

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1) Is It Too Late?: Will Businesses Leave Connecticut? What can be done to stop the loss of jobs to other states and increase employment for “current” CT residents. “Forty-six percent [of businesses surveyed] say they are not very confident, not at all confident, or unsure of their ability to find qualified workers to meet their needs over the next three years.” BlumShapiro, 2012 Survey of Connecticut Businesses, September 2012 “Roughly one in three businesses say they are considering moving or expanding to another state within the next five years, and nearly one in three have been approached by other states (mostly within the last year) about relocating or expanding there. The most aggressive states have been Virginia, North Carolina, Florida, South Carolina, Massachusetts, and New Jersey.” BlumShapiro, 2012 Survey of Connecticut Businesses, September 2012

2) How can state government respond to declining revenues? Cut social programs? Which programs? Increase taxes? What income groups could pay more taxes? Should businesses pay more taxes? “The Malloy administration had been projecting a deficit of about $365 million late in 2012. That gap was closed through a combination of emergency spending cuts ordered by the governor in late November, and additional cuts and some small revenue increases approved by the legislature in special session in midDecember. The Connecticut Mirror, State Budget Deficit Creeps Up Again, 23jan2013

“The $64.4 million shortfall in the general fund -- reported this week by Gov. Dannel P. Malloy's administration -- is only about one-third of the minimum threshold needed to force the governor to draft another deficit-mitigation plan.” The Connecticut Mirror, State budget deficit creeps up again, 23jan2013

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3) What are the implications of Connecticut’s aging population on property taxes and K-12 education funding? 57.5% of K-12 education revenues in Connecticut are derived from local property taxes. Among the 50 states, this is the highest dependence on local revenues for K-12 funding. U.S. Census Bureau, Public Education Finance: 2010, June 2012

“…Sharkey [CT House Speaker] said Thursday that he remains convinced the municipal property tax is harmful for many reasons, and Connecticut must work to reduce its reliance on that levy.” The Connecticut Mirror, Speaker ready to push the envelope to shrink municipal budgets, 24jan2013

4) What are the implications of low personal savings and high personal debt on housing construction (low-skill employment), which contributes to economic growth. Approximately 377 openings are available every year in construction-related industries in Connecticut. Connecticut’s Middle-Skill Jobs, Connecticut Dept. of Labor, Nov. 2009 In Connecticut in 2011, 64% of college seniors had an average debt of $28,783. This is the 5th highest college debt burden in the country. Student Debt and the Class of 2011, The Project on Student Debt, October 2011

30% of workers have less than $1,000 in savings/investments and 60% of workers have less than $25,000 in savings/investments (excludes value of primary home and defined benefit plans). Ruth Helman, Craig Copeland, and Jack VanDerhei, 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings, EBRI Issue Brief, no. 369, March 2012.

The average down payment to purchase a home is 22%.

HUD

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5) Assuming that children are the state’s economic future, how can we ensure that there is sufficient state funding, allocated most cost-effectively, for the programs and services that can help all Connecticut children achieve their full potential? Children do not vote. “This study [Natl. Bureau of Economic Research, Aug. 2012] suggests that increasing the income of poor families could potentially generate benefits from additional future income from their children worth about $2.6 billion yearly. Furthermore, the research finds that we would not have to wait long to see the benefits, and middle- and highincome workers would also benefit from increasing economic success among children from low-income households.” Orlando Rodriguez, Investing in Poor Children Makes Economic Sense, Connecticut Voices for Children, blog post 24sept2012

6) Given the realities of declining state government revenue, should the state fund programs that benefit older populations at the expense of programs that benefit younger populations? Can both be funded adequately? What are the alternatives? And with a sluggish economic recovery limiting revenue growth and pushing up demand for social services, analysts estimate state finances are headed for a $1 billionplus deficit in the next fiscal year [2013-2014] unless changes are made. The Connecticut Mirror. Speaker ready to push the envelope to shrink municipal budgets, 24jan2013

“Spending on education has not kept pace with health spending, and may even face a “crowd-out effect…the shift in the makeup of each dollar of spending is unmistakable and holds real consequences for our future. Connecticut Voices for Children, Shifting Priorities: Trends in State Appropriations, 1992-2012, October 2012

“…by 2020, the share of adults with some advanced education is projected to decline in all but six states, while the population of dropouts will swell...the Education Testing Service calls this a ‘perfect storm of demographic, labor market, and educational trends that threatens the American dream.” Poverty and Race, Reshaping the Social Contract: Demographic Distance and Our Fiscal Future, Jan/Feb 2012

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